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Aug. 4, 2020

Acquired by Lyft in less than a year - how to approach the process of acquisition, by Kenan Saleh.

Kenan Saleh the Co-Founder and CEO at Halo Cars explains how his company got acquired by Lyft in less then a year after it was funded and how he approached this process. We also talk about the fundraising of Halo and how building a strong self-sufficient team can help you fundraise.

Kenan's Twitter: https://twitter.com/kenanhsaleh?lang=en

Halo Cars: https://halocars.co/

The YouTube record: https://youtu.be/6zVj2GgX3mE

For those who want to see ideas turning into fundable companies - Student Startup Battle: https://www.eventbrite.com/e/student-startup-battle-tickets-105973058270?aff=ebdssbonlinesearch


This is fundraising radio and today's guest speaker. We have Ken salad Co founder at hello. Cars that got acquired by lift. And in this episode we'll talk about this acquisition by lift to know how it feels to be acquired by a lift how to get there. 

And most importantly, the PR and the fundraising so what does it mean to have a PR during the fundraising process? So can't, unless he called by, you giving us some background on yourself and on hello cards. 

Hello, thanks for having me, as you said, my name's keen on Sala. I was Co, founder and CEO of Halo cards. 

We started the company in the end of twenty nineteen, and it was sorry the end of twenty eighteen, the beginning of twenty nineteen I was a rooftop ride share advertising business. So we were putting screens digital screens on top of righteous cars. 

Have you ever been to New York and you saw taxis? A lot of the taxes had ads on top. We were doing a very similar model, but with, we were one of the first companies to do this on Roger. So we did that. 

We, we launched first in Philadelphia because I was a student at U Penn at the time when we started a company, we started there. We moved to New York because it was a bigger market, and we wanted to focus on it full time. 

And we did that for a little bit less than a year and then we got acquired by lift and November of twenty, nineteen. So not that long. But yeah, that's the summary of our journey. 

I think you were supposed to say that you were speaking on your behalf, not on behalf of list. Oh, yeah. Let me one ticket here. I'm speaking on behalf of myself on behalf of lift, which is where I worked out. Obviously. 

Thank you for your time. That's what happens when you start working for a big company, like a lift. So it's completely fine. We'll send that. But, let's talk about the acquisition too. How it happened. Did you actually prepare for it from day? One? 

You were, like, okay, here are our potential buyers and then one day you're like, okay, we're big enough. We're going to reach out to them and they're gonna acquire us or did they just email you you know, hey, guys, we've seen your growth when once you acquire you, how did this happen? 

It wasn't at all. We were not searching for us. We did not go out and see it. We, when you're when you're building a company and at the beginning, when you're thinking about it, you do naturally think about who are the players that could be potential potential acquires. 

So, for our company, it was a ride share advertising business. So, if there's gonna be someone who's going to buy it likely to be either around your company overleft or is gonna be an advertising company. 

Maybe Google, Facebook so on and we knew that from the beginning. But we would never, we would never searching for it. We were. We actually, so it was very early when we got acquired we do not expect anybody to be interested. 

And by your company, so we were just focused on building. 

We were trying to build the most compelling company and get the most traction that we could and we were approached by Lyft unexpectedly and they made us we considered and ultimately we decided to go for it. But we did not. 

It was a surprise to us. We didn't seek it out at all. Nice. So, how, how did they reach out to you? So, was it like a random email from Lyft saying, like, hey, we want to acquire you or we're considering 
acquiring you how does this happen? I'm just curious. 
Yeah, it was actually so not to not too dissimilar from what you described. It was a cold LinkedIn message. 

It wasn't actually to me, it was to my Co founder, there's I founded it with two Co founders from from my school and there was a message to them and it wasn't it wasn't hey, we want to acquire you. It was, hey, we're interested in what you're doing. 

Can we have a chat and then we did a few of those chats, which are you get to know the people that ask you about what you're doing. You asked them about what they're doing. We talked a little bit about maybe we can partner in some aspect. 

We didn't talk at all about acquisition until. 

Many meetings, and probably, like, I don't know the exact number, but I think five, six, a lot of meetings in before we even started talking about that and that's probably what they were thinking about from the beginning and they so they were just learning more about us. 

And then when they decided that they wanted to they let us know. So that's what part of why we were surprised. We were talking, we're talking about a partnership. We're, we're excited about it. Obviously we were thinking about how we're gonna partner. And then one day, they're like, oh, we wanna buy unexpected. 

Right? So, how do you feel, you know, you are basically, like, a year year and a half in the company I think, when you realize you're less than a year in a year and that's that's really impressive. So, how do you feel, you know, how do you feel to get that? 

We want to acquire you message it was, it was good. So it was a really, really exciting thing. It was. I mean, for me was extremely exciting for my Co founders. 

I'm sure it was as well extremely surprising. None of us expected it. We're very exciting. It's very validating when a big company believes and what you're doing, especially company like, lift we all use, lift, we all know lift. It's a pretty famous company for how big it is. 

So, it was it was amazing and it was the first, right? When you get, it's really exciting. But then, after that, you have to think about should I take it? What are these good terms? Should I negotiated? 

I walk away, so it becomes more serious and you lose the jubilation pretty quickly because you have to deal with. 

Yeah, more of the dirty work of it, but it's it's an amazing thing. I mean, for anybody who's had an offer, it's extremely fathering. It's a great feeling. Nice. Yeah. So what was your major takeaway? You know, we'll keep this heavy parts. 

Many of you are listening to fundraising radio for quite a while, you know, that's the content that we're producing here is a little bit dark because third world is dark. So let's jump straight into the not the fun part. 

Wouldn't just learn about acquisition, but to the part where you actually started thinking about that acquisition more in depth. So what was your major takeaway from it? 

So, now that you're looking back at it, would you like to negotiate better or wait for a year more until you accept acquisition or was there is something that you would like to change. 
There are, 
there are some things so something in general for startups is, it's usually better to be acquired later, 

because it means you have more time to build your business and develop your company and you'll sell for a higher price. 

Basically, it'll be more valuable along the way part of what a lot of corporate departments at the companies are supposed to do. Is there supposed to find things before? They become too big and before they become too expensive to buy. 

So, for shut up, if the more you can develop before you sell the better that's, that's one thing. Sometimes you don't have a choice. 

So, sometimes, you know, you get offers when you do, or the certain situations that, because of the maybe competitive landscape. You, you know, you sort of have to and you don't think you have a chance to stay longer. 

So, in that case, obviously, you know, you need to do what you can what you have to do but that's one thing. I would try for for any sort of I would not try and build to get acquired as soon as possible. It's not gonna be the best outcome. 

You should build to create the most long lasting company and really, really focused on building. It is scalable, solid company. And then at that time, you'll be very valuable if you get an acquisition, people will be interested because it's a successful company. 

And if you get an offer, it'll be for a much higher amount. So pushing it off as much as possible is good. Obviously, we, you know, we, we got acquired very soon less than a year in. 

And we had reasons for that as well so we, you know, we had to consider the offer we had to consider our competitors we had to consider the general landscape and things. So, for us, we, we decided it was, it was the right decision to do it early but that's that's what I'd say. 

I'd say, if if you have the opportunity to early on to reject offers, and you're really confident in your business, I would reject early and then wait until later. 

Ideally, right, I think why, if I'm thinking about myself, I would probably not be able to reject the offer, because it's just it's just so cool to claim that you have exit the company, you know, it's tough. 

So it depends on your your risk. 

So, if you're very confident that you can build a successful company by yourself, and you can become much bigger than you are now and you shouldn't for the most part you shouldn't sell you should say we're, we're gonna be in a year. 

We're gonna be even more we're gonna be even bigger, even more successful. So use it. 

If there's other things, if you think well, in a year, the space is gonna look really different, or if it's something like, wow, we think that sometimes strategic things where it's well, we don't want to compete with this company. 

So we're just gonna sell to them. And be part of them, and there's also things like that, but if you can, it's better to push off. Right right. So, speaking of, you know, building something that's gonna last long and. 

You know, destroy the competition on our Pre entry call. You mentioned that you've specifically to plenty of time to build this, you know, strong company I mean, strong team specifically that had the 
necessary skill set. 
How did he approach that problem? So, do you, like, build out the list of things you need intact business, marketing and all that stuff? And I actually picked people by yourself were how did that happen? Yeah, that's sort of what it was. 

I thought about when we were very early starting very early. I thought about the different sort of,
I don't know,
it's call them, 

but the different groups are the different parts of our business and we sort of had we had drivers, 

which was we need a drivers in order to put our screens on top of this is kind of the supply side so we had a whole driver side of our business. 

Then we have a whole advertiser side of our business, which is the people who are buying advertising. So, this is the demand side. We have demand supply. We're kind of like a marketplace and that's but that's two separate areas. And then we had a product, which was we needed to build the hardware and the software. 

So you can maybe you can maybe separate or product into hardware and software. So, those are sort of the four areas that I thought we need somebody one Co, founder to be an expert and to be the leader and those kind of areas. And that's what I was thinking of. 

I was lucky because I had friends who were really good at all those. So. 

There's for me originally, two of them were friends I had known previously. One of them had a ton of hardware experience was mechanical engineer did robotics, all sorts of stuff. So have the hardware experience that was needed. 

I focus on the software. I did the software for the team, and then one of my other friends did all the driver stuff. So his father was an Uber driver. He, he was very familiar with Uber and Lyft drivers and what motivates them how to talk to them and so on. 

So, we have like, a three part of the business, but the one that we lacked is the demand side. 

We didn't have anybody who had been selling advertisements or selling to advertise the agencies or advertising brands, or at least I didn't have a friend. So I recruited somebody that I met. 

I basically I was looking around the campus we're at University. So, I was wanting to help I was looking around the campus for somebody who could do and I met somebody at an event where I was pitching the company and someone came up and said, I have, I have a ton of experience this. 

I worked at Google. I sold as to I work with agencies and have the experience that was necessary and, you know what they're doing. So, I said great. We talked a little bit more to make sure that it was a good fit and that they would like the team, the team with him and so forth. 

But after a few weeks, not even a lot. I was like, two weeks. 

They join the team officially, and there was so we had from the very beginning we had a couponing team, but covered all aspects of the business and we didn't need to hire anybody for a long time. 
We had interns in the summer, but we, we actually never made a full time higher. 
Because we didn't need it. We had we had all the areas covered. We didn't need to a lot of people hire external shops, especially development shops. They don't have a technical person on the team. Well, hire someone to do all the coding for them. We never needed to that. 

So it was great. We were basically self sufficient with just cofounding team. Nice day. So, from my understanding, you basically got this team, which was self sufficient. That's really cool. And right away. 

You're basically went out and decided to go out and raise money for the company, because you felt like your team is big enough and good enough to cover everything. Right? Yeah. 

Mostly, we, for the first few months from January twenty, nineteen to may twenty, nineteen we were all still in school. 

So we were a student entrepreneurs and we were doing school and we're doing Halo as well. And so we were in Philadelphia. That's where I school was. That's where we're also working on the business, and we have not raised money yet. We raise our seed right? 

So right when we finished when we graduated. So when we finished school, and in that meantime, we were doing as much validation as we could. 

So, we scrapped together our money, there's no money and then we also got, there's some awards that the university game gave basically free money to students. So we were able to get some money from the university for free. 

We're able to put in some of our own money, not a ton of very small amount. 

We're talking about, like, a few thousand, not, you know, a ton of a lot of money. And what we did is, we bought one about one unit, what rooftop digital screen. We put it on one driver and Philadelphia, and we showed our own ads. 

We showed him website and then we ran a test. Basically, we track how many people came to our website and then we tracked. This is where the card drove. And then we looked where do people search for us on Google? 

And we can see overlap and where the card drove is where people are searching for us. So we started to get we started to get traction and tried to run as many tests that would validate what we're doing with a little money as possible. Basically. 

Yeah, we whatever you can do with, like, a couple thousand dollars. That's what we're doing and then we ran those tasks for as long as we could, we even ran some free advertisements for local businesses. There was a, there was a local coffee shop nearby. 

We ran an advertisement for them all this for free and we did it on a few cars, like less than five cards. So it was tiny, tiny scale. And then in May, when we had done all this, all this work, we had built out. 

We've proven that this could work we approved that we could do it from a hardware and software perspective, then we wouldn't raise money. So we didn't have much then, but we have a lot more than just, you know, an idea and a pitch deck. We had a product, we could point to, at least a prototype a good point too. 

We had early test campaigns that we had done with some early results. So we have quite a bit done. And then we also had a team that we thought was very compelling. This problem. 

So, we raised at may or in May, and once it is, we raise half a million dollars in May and then we move to New York and then we start, we took a full time. Nice. 
So, I'm curious where was that point when you decided, you know, it's time to go into this full time and actually go and raise money was it right after you graduate college that the breaking point basically, it was actually just school based. 

So, because we were recipients, and then we had classes and stuff. I was also I was about to graduate. I was just a few months away from graduating. So I don't I wasn't gonna drop out of the middle. 

So I was just saying, I have a few more months let's just finish it once we finish, then we all like, a few days after my graduation. We packed everything into a U haul and we ship it all to New York. 

And then we're full time, completely full time from that. We lived in the same house. We work together, we did that for the next for months until we required next for months until you record this. That sounds really cool. 

I think that that's a pretty epic story. I wish you dropped out that would be even. 

Better story, but still a smart move. I mean, dropping out two months before you, you're done with university, it's not not as smart as by my Co founders did drop out. 

My Co founders were so one of them was an MBA first MBA didn't finish. Mba drop out another one was a undergraduate, a software undergraduate dropped out before finishing. It was more I was so close to graduating. I was a couple months away. 

I was just going to finish it and be done with it. I should probably bring your Co founders. So,
it's yeah,
I'm just kidding I'm just kidding, 

but let's do a little bit more time traveling this time and if you could go back in time and change something in your fundraising process, 

or in the stage,
when you decide to fundraise or in the way,
you talk to investors or wherever out there was to change what would it be but yeah, there's a few things.
So one of them is, I would talk to more people. 

This is a mistake we made I think it's a mistake. Probably everybody makes and there are so many investors the one that it's just anybody you'd be shocked at how many investors there are between angel investors, micro PCs actual PCs. 

And then there's even there's some like, private equity groups that's sometimes the early stage stuff. So they are just there's so, so many investors in the world and it's sort of a numbers game. 

You know, if you, if you reach out to a large number, it's like we had a few of them will say yes and it's a little bit. It's a little bit random. Some people will like it for whatever reason other people don't like it. 
And you just need to talk to as many people as possible. 
Get get the widest right and then you can decide we want to go with we went after that we were pretty narrow. We talked to people, we knew we talked to vc's in Philadelphia in New York, the people that were accessible to us. 

We talked to angel investors sort of friends and family angel investors as well. 

And we raise money. It was that's it's okay, but I just realized afterwards how much more there was, we could have talked to so many more people. 

We probably wouldn't raise more money because we raised exactly how much we wanted to, but we could have a lot more term sheets. Maybe we could have gotten better terms. I'm not sure but it would have been easier. It definitely would've been easier if we had more options of the options on the table. Absolutely. 

That's actually, that's a great advice. And many people ignore it specifically early stage founders, whenever they see interest from one investor, like serious interest, they're like, oh, we're just going with them at first that mistake screwed up. 

So, yeah, the other the other thing with that is a lot of people will take too much too much feedback or listen too much of the advice of a single investor. They'll get negative feedback from one investor, and it'll just the more allies. 

Then they'll want to go and change the business model or sometimes these will say I like this but you should change this part of the business model and they'll and they'll listen to it. 

So and for the most part, I would say, it's usually not good advice because investors, I don't know, they don't know the business like the entrepreneur. They're not living it every single day. They, they give advice, but they don't know better than the entrepreneur. 

So people, I think they take this advice too much, and they put too much credibility into it. So just a small sample size. I'll talk to a few investors and they'll say I talked to three investors. None of them wanted to invest. So, I don't think this is a fun idea. 

And there's, there are thousands and thousands of investors that have completely different risk appetites and preferences and whatever there is. 

If if you have a good sample size, then I'm sure if you can get a better read on whether, or not investors like it, like, three is not enough, you should talk to at least ten twenty before you can make any judgment on is this a fundable idea is that a good idea or not? 

Right, right that's definitely good. Advice. Numbers sometimes works. Most is worse, but here we're moving on to the part where you've got much more interest after you close your round. 

So, on our preach recall, you mentioned that after you close your round and, you know, you started scaling, you know, more and more cars were driving on those things on roof with hallo advertisement and, you know, vc's are seeing this and like, how I should Google it. 

And then, you see, they see that. This is third thing. My invest, and they started reaching out to you, but he's still did not accept any additional offers. Why didn't you decide to we're using some additional capital just to make sure that you're you're safe. 

there's a lot of good points in in this here I'll first off with,
I think the best way for people to fundraise or for start ups to fundraise is to raise as much as you 
need for a period of time, 
be in fundraising mode and get all the money that you need, 

and then for the next however, 

many months, 


six months, 

twelve months. 

However, much. You raised for. I would just be incompletely building and not worry about fundraising at all. I wouldn't don't take investor meetings. Don't be meeting with random people. 

Who email you all that kind of stuff just be focused on building. I think that's that's the best way in order to to really build and and focus on what you're doing. Otherwise it's easy to get distracted with all sorts of things. 

And that's what we did, so we raised five hundred thousand dollars. We can do five thousand dollars was enough to the rest of the year. 

That was we raising money for the rest of the year we didn't want to raise again until after that. And then once we raise that was it, we were building out so we got a lot of emails from people as we started getting more traction LinkedIn messages. 

Email all sorts of stuff saying, hey, this is really exciting. They're from there from big VC firms, like pretty well known BC firms we want to meet, you know, we'd like to hear what you're doing and we'd always respond like, sorry, we're focused on building right now. 

We're not worried about fundraising, but when we raise again, we'll definitely talk to you and we would keep a list of all the people that I reached out. So when we wanted to fundraise again, we, we would go reach out with them. So that was, that was the main reason why, we just didn't need the money. We didn't need the money. 

We don't want the money we're focused on building. So that was why, we didn't take on any follow on investment. We have plans to raise again at the end of the year so we raised five hundred thousand. We expected that to last us for the year. 

And we were expecting to start raising again at the end of the year. So, then we have more money, obviously, for the next day. And we so that was our plan. We're making a list of every single person that reached out in the meantime. 

So that when we went into fundraising mode, we would do it really focused where we'd have like, two weeks, three weeks, four weeks, whatever where we would meet with every single investor that was on that list. All we would be focused on was was raising money. 

We didn't actually get there because we got acquired for the year so, yeah, we didn't we didn't get to that point, but that was the plan. 

So staging it like that intentionally is, in my opinion, the best way to do it, otherwise it's very easy to just gets way distracted take a meeting here, take a meeting there. 

And then it's, I think it's very disruptive to actually building a business. It takes a ton of time, so yeah, good point. And I'm curious, how do you work with that list of investors that you're building? Like, do 
you reach out to them? 
Like, do you send them quarterly updates saying hey, this is what we've done. This is our revenue growth or so you're doing that? Well, we do that for our investors. So, our in our first round, we did the monthly investor update and exactly. 

Like you were talking about. We would talk about. We'll start off with the, which is our revenue. How many drivers we had, we had a few things that were for our business. 

We talked about the good things that happened in the past month, the bad things that happened in the past month, and then we would leave any asks that we have to the investor yet. We did that every month on the first of every month. Exactly. 

So, we send that to our investors, the people who already have put money in and they were they were shareholders. We didn't send it to future investors for people who had reached out and said that they're interested. We just kept them on a list. So, we had, I don't know if, you know, air table, but we kept their table based. 

Of all the people who have reached out and their emails, so we were ready when we decided to to fundraise we could email all those people saying, hey, we're, we're raising money now. This is where we are, this is why we need money and give them the story. Great. 

So, do you think it would be a better idea of, you know, keeping those potential investors in the loop as well so send them quarterly updates? You could I think some people do this. This is a common thing. People do. Yeah. Yep. Yeah. 

We never did it, 

because we are in investor updates were very detailed so we don't wanna give that much detail to outside investors, 

especially because we have competitors and we didn't want they are in the business of investing in companies. 

So, they probably had talked to our competitor, or they knew our competitor or something. So we didn't want that information to be out there in the world that could be forwarded to someone we didn't want to see. So, that's why we kept it pretty close and that's that's because we kept we did monthly emails. 

We've, we made them very detailed because for our investor base. 

Another version of this could have been, you've got a monthly email that is really detailed with your investor base and then you have a quarterly version, which is high level not as detailed. You send out to the broader group. I think that would've direct. 

We never did it because we, I mean, there's a lot of we're already ready. One month. We were gonna write another one a quarter and then we were around for corner and a half. So we don't have a lot of quarters to write about. 

But that would have worked. Yeah, that's that's my personal advice. You know, those people who showed some interest, definitely send them those quarterly updates. 

You know, I personally got it got connected to a company, because they sent another investor a quarterly update, and she forwarded that to me. So it's like, there might be a launching that might lead to something helpful. 
So definitely take this extra few hours to build that quarterly, but here, we're moving onto. I want to 
close this episode with something, you know, positive. 
So, one thing that do you remember something like, really good about the fundraising process? So maybe like, the first check you got from an investor, and you're like or something, that's something else that was, like, really memorable and something positive. You know. 

I mean, there's, there's a few things one of the things is that when it finally everything closes, it's a very, very, like, the money is in your bank account the papers are signed. 

It's an amazing feeling, because for every fundraising process, every deal, anything like this, that happened. There's always a pandemonium right before I close this, like before a few days before somebody wants to pull out. 

Somebody's not sure somebody has last minute question. Somebody new wants to come in. There's always craziness that happens, right? 

Before these things get closed and so you just you, basically on the phone and email twenty, four, seven and you sort of access you just, you want everything to come together and you want it to be done. 

So, when that happens very tranquil moment, the money in your bank account papers, aside, you can just stop focusing on this and you can you can go back to billing. That's a great feeling. So, I have that feeling. When we raise money. 

I also have the feeling when we were acquired, because when you're, it's, it's, it's the same thing. There's a big process and eventually you need to get the signatures, but it takes a while to get there at the last minute. There's also the things that happen. 

So, what it finally closes, it's a great feeling. It's one of the best things. That's really cool. And that's really positive. So, thanks for that and we're moving on to the last question of today's episode, which is a call to action. So, what's that? 

One thing that you would like to listening to do as soon as the episode is over. Listening to do, let's say so one is you should go to to our website Halo cars that SEO. 

You can learn about our company if you're an advertiser and you're interested in advertising with us, you should reach out. We have a great product. I think it'll work. Great for your brand. The other thing you can follow me on Twitter as well. 

I don't Tweet as much, but I'm starting to if anybody wants to interact with me, follow me at H Sala so first name age and then my last name, you can find me there. 

Alright, I'll definitely include the link to in the description of his episode and also can Twitter and my last question share would be. Why do you start tween right now? 

So, is it for networking purposes or is it, it gives you actual like Twitter. So, I've always I've used it for a long time, but I've just been reading and the reason why I'm just for maybe four years. 

Now, the reason why I've learned a ton from Twitter has been just incredible resource for me for learning about startups about VC, about all sorts of things. And because what I like, most people would give. 

They would get about to talk about their experiences, give their advice and these were people who had a lot of experience and were successful and I can learn from them. So, now that I have some experience, and I think I have good advice to share. 
I feel it's sort of like it's the right thing to do for me to share my experience, the new people, and go full cycle instead of just being the one reading from Twitter I wanna start contributing people. Definitely nice. That's nice. Move. That's very generous. 

Very startup minded, so nice. Nice work there. 

We'll definitely include that in the description of this episode, and my personal call to action will be go to the description of this episode as usually I'll include a bunch of useful links for you that can mentioned. 

And also, also, this is actually our first video and audio podcasts that we're recording today. So if you're curious to see how will look like, I'll include the link to our YouTube recording as well. So, take a look at it.